Investment in U.S. Agriculture

Utpal Vasavada and Robert G. Chambers

American Journal of Agricultural Economics, 1986, vol. 68, issue 4, 950-960

Abstract: Resource adjustment problems in U.S. agriculture are motivated against the background of the farm problem. The adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory. The investment demand equations assume the form of a multivariate flexible accelerator. Results indicate that labor, capital services, and land exhibited quasi-fixity while intermediate materials were a variable factor. This can be construed as a form of asset fixity within aggregate U.S. agriculture. The univariate flexible accelerator hypothesis is rejected.

Date: 1986
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